Satoshi Nakamoto published his legendary Bitcoin whitepaper in November 2008.
13 years later, Bitcoin has over a trillion dollar market cap
and is well on its way to overtaking gold as the greatest and most valuable asset on Earth.
Crypto is the fastest growing asset class the world has ever seen.
And the most exciting part is how early we still are.
I know. I know.
It sounds crazy.
But the truth is, we're only now beginning to truly understand its full potential,
let alone unleashing it.
In this video, we'll be diving into two key concepts,
network effects and Metcalfe's Law,
which can give us some super important clues about where this space is headed to.
I should warn you though.
It's mind-bending stuff.
Let's get it!
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Raoul Pal isn't just a two-to-one favorite to be the next James Bond.
He's also one of the most interesting thinkers in all of crypto. Why?
Because when he's not sipping rum cocktails and beating up bad guys,
the Real Vision CEO and former hedge fund manager is busy thinking about the bigger picture,
the global macro environment,
and the narratives most likely to drive the next era of financial markets and digital culture.
If you're subscribed to his free crypto channel on Real Vision,
which I highly recommend you do,
chances are you might have heard him talk about something called Metcalfe's Law.
But what is it?
Well, it's named after this guy.
Robert Metcalf.
An engineer and entrepreneur who co-invented the network protocol called Ethernet
and also must have met a lot of baby cows.
This law states that the value of a network is proportional
to the square of how many nodes it has.
Why?
Because value is based on the number of possible connections.
In simple terms,
it all comes down to how many users or devices participate in any given network,
how many connections are created between them.
Take Facebook as an example, or should I say Meta?
Which rapidly became one of the most valuable companies on the planet
thanks to a network of almost 3 billion people.
The same goes for Amazon and Google,
companies that were able to become global supervillains thanks to Metcalfe's Law,
their network effect and the unprecedented growth of their adoption.
So, how does this relate to crypto?
Well, in a recent interview for Real Vision,
Raoul reminds us that crypto and blockchain is the fastest adoption of any technology
in all recorded history.
I'll say that again.
The fastest adoption of any technology in all recorded history.
As you let that sink in,
take a look at this logarithmic chart he made comparing the rise of crypto
with the rise of the internet.
Back in 1997, the internet had 150 million users and was growing at 63% per year.
Today, crypto has almost 150 million users.
Only this time, it's growing at 113% per year.
It's not just crazy growth.
That's exponential.
Since us humans tend to think in linear terms,
it's practically impossible for us to wrap our lizard brains around the scale of it.
The internet itself is the ultimate carrier of network effect
because it can facilitate scaling like we've never seen before.
I made a video where I take a deep dive into the internet and a threat to its very existence.
And you can see that video by clicking here.
But back to the growth of the internet.
To put it into raw numbers,
if we continue this rate of adoption, and there's no reason to think we won't,
crypto will have a billion plus users by 2024.
Within a decade, crypto assets will have a market cap of over $200 trillion.
That's an insane 75X from where we're at today.
History doesn't repeat itself,
but it often rhymes.
And this is where things get even cooler.
Because the same goes for adoption effects.
In fact, it's actually kind of spooky.
It seems to be a sort of human behavior thing.
And as Raoul says in that sexy accent of his,
it's bloody weird.
He's been sharing some of these fractal log charts on Twitter,
and you've got to admit,
the similarity is way too obvious to write off.
Just check out this one plotting the current Bitcoin price 2021 with 2013.
And while I don't personally think we're going to follow this all the way up to $250K in this cycle,
though, believe me, I won't be complaining if I'm proven wrong on that,
it's clearly followed a similar trajectory so far.
Raoul is no Bitcoin maxi though.
He's actually the opposite of full-on degen
and he's way more bullish on Ethereum's potential ROI this cycle
than almost anyone in the space.
And since he's so bullish on the network effect of the whole asset class,
he's also started looking at Ethereum and another layer 1s
from the specific angle of Metcalfe's Law.
Join the layer 1 of all crypto content by smashing that like and subscribe button.
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and gives you access to the latest in crypto, NFT and metaverse news and education.
But here, we can see the chart mapping Ethereum in this cycle comparing to Bitcoin in 2017.
And again, it might not be perfect,
but it's accurate enough to pay serious attention to.
I mean, wow!
A BitBoy can certainly dream.
Even more accurate in this comparison between Solana today and Ethereum's last cycle.
I mean, seriously,
that's about as freaky as seeing Dirty Gary Gensler outside your window at night.
Look. I don't know if we'll see these fractals play out for much longer.
They're bound to break at some point.
But they illustrate an important point.
The network effects are the name of the game.
Mind you,
as Raoul said when I interviewed him on here on BitBoy Crypto,
Solana is the Ethereum of 2021.
Only unlike ETH back in 2017,
it actually has an insane amount of stuff being built on it,
not to mention the backing of the financial cartel.
So I wouldn't be surprised to see it go on another crazy run
just as the fractal suggests.
I mean, Solana is 100% the chosen layer 1 of this cycle.
Just check out this top secret footage leak from the recent conference in Lisbon.
The point is that when network protocols get adoption,
when they start to gain network effect,
they tend to move in much the same way.
LUNA is another great example.
Like Solana, it's following an almost identical trajectory to Ethereum back in 2017.
It doesn't make sense,
but it's exactly what seems to be happening.
So, what does all this mean?
And what does it mean for you and your portfolios?
Well, one of the things Raoul is so good at is seeing the bigger picture.
While I know you all want short-term price predictions,
sometimes the best and most important thing to do is zoom out.
Why?
Because once you know where this thing is going,
you develop the kind of conviction you need to succeed in the space.
To put it into context,
crypto asset class is growing at twice the speed as the fastest adopted technology in human history,
the internet.
Everyone and their dog is coming for crypto.
Institutions, wealth funds, retail investors, nation states.
Our job is to front run them.
Just think about it.
People here today are participating in an asset class that's worth $2.8 trillion.
Meanwhile, pretty much all other major asset classes,
real estate, bonds and equities,
are sitting around $200-300 trillion.
This has so much more room to grow.
It's hard to even compute.
But does that mean you should just buy and hold?
Well, not actually.
You want to realize your profits and reinvest them back into the bear market
in protocols and projects that either have network effect
or which you believe have the potential to achieve it.
That is how you win the game of crypto.
That's all I got.
Be blessed.
BitBoy out.